CALGARY, Alberta (Reuters) - The Progressive Conservative and Wildrose parties in Canada’s oil-rich province of Alberta signed a tentative agreement on Thursday to merge, creating a unified right-wing opposition to the ruling New Democratic Party.

Alberta Premier Rachel Notley takes part in the First Ministers’ meeting in Ottawa, Ontario, Canada, December 9, 2016. REUTERS/Chris Wattie

The United Conservative Party could provide a serious challenge in the next provincial election, due in 2019, to Premier Rachel Notley’s left-leaning NDP, which was helped by divisions on the right when it swept to power in 2015.

Alberta is home to Canada’s vast oil sands and is the largest exporter of crude to the United States. But it has been struggling with a three-year slump in global oil prices and a C$10.3 billion ($7.57 billion) deficit.

The energy industry is likely to welcome unification of the right, with the new party eager to develop policies aimed at cutting costs for the oil and gas sector.

Jason Kenney and Brian Jean, leaders of the PC and Wildrose parties, have both pledged to scrap unpopular environmental regulations, including carbon taxes and the phase-out of coal-fired power plants.

“The first act of a United Conservative government will be the carbon tax repeal act, the first job will be restarting Alberta’s economy, restoring investor confidence, getting jobs back to our province,” Kenney told a news conference in the provincial capital, Edmonton, where he and Jean signed an agreement to start the merger process.

Both parties will ask members to vote on the proposed merger in coming weeks. Once approved, the new party will hold a contest to elect a new leader, in which both Kenney and Jean have said they will take part.

Some voters in the traditionally right-wing western province say NDP policies like higher corporate taxes and a cap on oil sands emissions have exacerbated the downturn by making Alberta less attractive to potential investors.

In recent months, international oil majors have sold off billions in oil sands assets and Canada has not made any progress on building new crude export pipelines.

A February poll by Mainstreet/Postmedia showed the Wildrose Party had 38 percent support among decided and leaning voters, while the PC party had 29 percent and the NDP 23 percent.

“If the election was today, they (the NDP) would be sunk and defeating a unified conservative party would be very difficult,” said Duane Bratt, a political scientist at Mount Royal University in Calgary. “Some people are blaming the entire economic downturn on the NDP, even though it was occurring before they were elected.”

The PC party ruled Alberta for 44 years until 2015, while the Wildrose Party was formed in 2008 because of dissatisfaction with the PCs. The two parties have a combined 30 seats in the Alberta legislature, versus 55 for the NDP.

Any move to scrap the carbon tax would cause tensions with the federal Liberal government of Prime Minister Justin Trudeau, which says it will impose a tax on provinces that do not move independently to meet binding targets set by Ottawa to combat emissions.

($1 = 1.3605 Canadian dollars)

Additional reporting by Ethan Lou in Calgary and David Ljunggren in Ottawa; Editing by Dan Grebler and Peter Cooney